Australia Viewpoint - The impact of elections on the economy May 2016

With the Australian Federal election scheduled for 2 July 2016, we have reviewed the body of research analysing the impact of elections on economies around the world. Conventional wisdom is that elections have a suppressive impact on consumer confidence, retail turnover growth, investment spending and financial markets. It is often suggested that elections are particularly tough on retail trade. These macroeconomic drivers could have flow-on effects on the property market and disturbances can impact the performance of real estate assets.

Intuitively it makes sense for investors to be less bullish in a period of high uncertainty and negative political rhetoric, but the data remains unclear and any impacts appear to be short-term and minimal. Circumstances leading up to the election are also important as in many cases results can be confidently determined prior to an election and therefore be “priced in” to expectations. With the current campaign showing close poll results, the potential impact of the final outcome may be more significant than in recent elections.